Annual Report
Year Ended March 31, 2021

HARIMA CHEMICALS GROUP, INC.

Business Overview
Due to the effects of the pandemic COVID 19, the world economy during the first quarter (April1,2020 toJune 30,2020) of the current fiscal year was in extremely difficult situation. From the second quarter (July
1,2020 to September 30,2020), economy in Europe started to recover, but because the COVID 19 spreadagain in the end of 2020, the future was uncertain. On the other hand, economic activity in China was started
again, the economy has shown growing signs of recovery.
In Japan, after the release of the first state of emergency in May 2020, there was a movement of recovery
in Japanese economy. But because the COVID 19 also spread again in Japan, the government issued a second
state of emergency in January 2021. Fixed investment, corporate income and employment were weak,
Japanese economy did not recover in the fiscal year 2020.
Under these circumstances, our group also suffered a particularly severe decline in orders due to the effectsof the COVID 19, as a result, the fall in both sales and income was not avoided. We have tried forenlargement of sale while carrying out reduction in cost.
About the oversea business of our group, because of the COVID 19, the whole sales volume decreased
significantly. Even though our subsidiaries of the Paper Chemicals Segment in China remained stable, bothrevenues and earnings of our group decreased than the previous fiscal year.
As a result of these conditions, the group’s consolidated net sales for the current fiscal year decreased by
8,948 million Yen (down 12.5%) year-on-year to 62,850 million Yen. Operating income decreased by 2,175
million Yen (down58.0%) to 1,576 million. Ordinary income decreased by 2,496 million Yen (down 69.5%)
to 1,093 million Yen because of the foreign exchange loss and equity in losses of associated companies.
Net income attributable to Harima Chemicals Group, INC. in this fiscal year was 1,091 million Yen,decreased by 1,126 million Yen (down 50.8%) because of the gain on sale of investment securities.
Status of Business Segments(Resin & Tall Oil Products)
Due to the spread of the COVID 19, in the printing ink industry which demand was sluggish. Also becauseof the digitization acceleration, print for the commerce and production volume of newspaper decreased. In
the synthetic rubber industry, styrene butadiene rubber, the main material of automobile tires, which volume
of production decreased significantly. But a recovery trend was seen in the latter half of the current fiscal
year. In the paint industry, volume of production of the paint for buildings decreased.
In the current fiscal year, sales of functional nanoparticles dispersion liquid remained steady, but sales ofresin for printing ink, emulsifier for synthetic rubber and resin for paint decreased significantly. As a result,the operating income of this segment decreased with the decrease in sales and the price increase in main raw
materials.
(Paper Chemicals)
In the domestic paper industry, also influenced by the COVID 19, demand for paperboard and information
printing papers declined. As a result, the total production volume of both paper and paperboard decreased.
At the same time, about overseas market, demand for paper and paperboard in China increased because of
fast economic recovery but which decreased in the US.
Consequently, China subsidiaries kept a good business performance which was mainly due to the increased
demand for paper strength enhancers. But the sales of domestic and the US subsidiaries decreased. As aresult, total sales of this segment decreased than the previous fiscal year. On the one hand, total segment
income increased thanks to the sustainable good performance of China.
(Electronics Materials)
In the semiconductor-related industry which kept a good business performance because of the expanding
demand of PC and telecommunications infrastructure with the spread of home teleworking. But production
volume in automobile industry decreased because of the effects of the COVID 19.
In this segment, sales volume of functional resin for semiconductors and soldering materials increased, but
sales volume of conductive paste and brazing materials for automobile heat exchangers decreased. Though
the segment total sales decreased, the income increased than the previous fiscal year because we tried torationalize the management by integration - abolition of sales offices.

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(Lawter)
Lawter segment, developing business in 7 countries around the world, which main business ismanufacturing and sales of adhesive resin and printing ink resin. Because sales volume of adhesive resin in
Europe and South America increased but decreased in other areas, total sales decreased than the previous
fiscal year.
Demand for printing inks was sluggish not only on the background of digitization of information but also
because of the spread of the COVID 19 especially. Sales volume of the printing ink resin decreased than theprevious fiscal year.
Operating income of this segment decreased drastically because of the decrease of the sales volume and therise in cost price rate of synthetic perfume-related product.

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Consolidated Business Performance Trends(Millions of Yen unless otherwise stated)
76th Fiscal Year

77th Fiscal Year

78th Fiscal Year

79th Fiscal Year

(Fiscal year ended
March 2018)(Fiscal year ended
March 2019)(Fiscal year ended
March 2020)(Fiscal year ended
March 2021)

Net sales

73,31078,58971,79962,850Ordinary income

4,008

4,818

3,589

1,093

2,725

4,131

2,217

1,091

105.03159.02

87.67

43.44

Total assets

69,63772,87071,39569,390Net assets

36,09737,81137,74537,441Category

Net income attributable
to Harima Chemicals
Group, INC.
Net income per share(Yen)(Notes) 1. Net income per share is calculated based on the weighted average number of issued shares during
the fiscal year after deducting treasury stocks.
2. We applied ASBJ Statement No.28, “Partial Amendments to Accounting Standard for Tax EffectAccounting” issued on Febryary16,2018 form the beginning on the 77th Fiscal year.
The information of the 76th Fiscal year was changed into new data which allows retroactive
application of the new statement above.

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HARIMA CHEMICALS GROUP, INC.
and Subsidiaries
Consolidated Balance Sheet
March 31, 2021

ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 16)
Notes and accounts receivable (Note 16):
Trade notes
Trade accounts
Associated companies
Other
Allowance for doubtful receivables
Inventories (Note 5)
Other current assets
Total current assets
PROPERTY, PLANT AND EQUIPMENT (Note 6):
Land (Note 7)
Buildings and structures (Note 7)
Machinery and equipment
Lease assets (Note 15)
Construction in progress
Other assets
Total
Accumulated depreciation
Net property, plant and equipment
INVESTMENTS AND OTHER ASSETS:
Investment securities (Notes 4 and 16)
Investments in associated companies
Deferred tax assets (Notes 3 and 13)
Other assets
Allowance for doubtful accounts
Total investments and other assets¥

Millions of Yen
2021
2020

Thousands of
U.S. Dollars(Note 1)
2021

3,422

$

LIABILITIES AND EQUITY

2,413
14,874
176
803
(75 )
12,047
1,907

2,442
14,964
168
943
(91 )
12,9381,208

21,796
134,351
1,590
7,253(677 )
108,816
17,224CURRENT LIABILITIES:
Short-term bank loans (Notes 8 and 16)
Current portion of long-term debt (Notes 8, 15, and 16)
Notes and accounts payable (Note 16):
Trade notes
Trade accounts
Associated companies
Construction and other
Income taxes payable (Note 13)
Other current liabilities

35,56736,483321,263

Total current liabilities

8,306
18,60728,886
769
693
5,084
62,345(39,894 )

8,516
18,78427,494
739
1,258
5,138
61,929(38,814 )

75,025
168,070
260,916
6,946
6,260
45,921
563,138(360,347 )

22,451

23,115

202,791

COMMITMENTS AND CONTINGENT LIABILITIES(Notes 8, 15, and 17)

3,351
5,357
1,243
1,423
(2 )

3,363
5,532
1,328
1,577
(3 )

30,26848,388
11,22812,853(18 )

11,372

11,797102,719

EQUITY (Note 11):
Common stock, authorized 59,500,000 shares; issued,
26,080,396 shares in 2021 and 2020
Capital surplus
Retained earnings
Treasury stock – at cost: 946,459 shares in 2021 and 974,643
shares in 2020
Accumulated other comprehensive income:Unrealized gain on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Total
Noncontrolling interests

¥

3,911

30,910¥ 8,626506¥ 12,384
1,400$ 77,915
4,570

776
7,139
166
1,463
309
1,917

869
7,799
195
1,497
495
1,929

7,009
64,484
1,499
13,2152,791
17,317

20,902

26,568

188,800

LONG-TERM LIABILITIES:Long-term debt (Notes 8, 15, and 16)
Long-term deposits received (Note 16)
Liability for retirement benefits (Note 9)
Asset retirement obligations (Note 10)
Deferred tax liabilities (Note 13)
Other long-term liabilities

8,546
556
397
49
810
688

4,121
583
1,484
49
625
219

77,193
5,022
3,586
443
7,316
6,214

Total long-term liabilities

11,046

7,081

99,774

10,013
9,765
18,337

10,013
9,768
18,20190,44488,203
165,631(998 )(1,028 )(9,015 )356(2,720 )(187 )
34,5662,876

872(2,440 )(250 )
35,136
2,610

3,216(24,569 )(1,689 )312,221
25,97837,44237,746338,199¥ 69,390¥ 71,395$ 626,773

Total equity
TOTAL¥ 69,390¥ 71,395

TOTAL$ 626,773

See notes to consolidated financial statements.

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Millions of Yen
2021
2020

Thousands of
U.S. Dollars(Note 1)2021

HARIMA CHEMICALS GROUP, INC.
and Subsidiaries
Consolidated Statement of Income
Year Ended March 31, 2021

Millions of Yen
2021
2020
NET SALES

Thousands of
U.S. Dollars(Note 1)2021

¥ 62,851¥ 71,799$ 567,708

47,88853,843

432,554

14,963

17,956135,154

13,386

14,203

120,910

Operating income

1,577

3,753

14,244OTHER INCOME (EXPENSES):Interest and dividend income
Interest expense
Rental income
Commission paid
Foreign exchange loss
Gain on sale of property, plant and equipment
Loss on impairment of long-lived assets (Note 6)
Loss on disposal of property, plant and equipment
Gain on sale of investment securities
Equity in losses of associated companies
Other – net

105(261 )
34(8 )(348 )
12(342 )(53 )
1,553(110 )
158

147(292 )
39(9 )(112 )
9
(76 )
(26 )
6
(40 )
115

948
(2,358 )307(72 )(3,143 )108(3,089 )(479 )
14,028(994 )
1,428

740(239 )

6,684

2,317

3,514

20,928

607
210

838
49

5,483
1,897

817

887

7,380

NET INCOME

1,500

2,627

13,548NET INCOME ATTRIBUTABLE TO NONCONTROLLINGINTERESTS(409 )(409 )(3,693 )¥ 1,091¥ 2,218

COST OF SALES
Gross profit
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES(Notes 12 and 14)

Other income (expenses) – net
INCOME BEFORE INCOME TAXESINCOME TAXES (Note 13):
Current
Deferred
Total income taxes

NET INCOME ATTRIBUTABLE TO OWNERS OF THE
PARENTYen
PER SHARE OF COMMON STOCK (Notes 2.t and 19):
Net income
Cash dividends applicable to the year
See notes to consolidated financial statements.
-5-¥43.44
38.00

$

9,855

U.S. Dollars¥87.67
38.00

$0.39
0.34

HARIMA CHEMICALS GROUP, INC.
and Subsidiaries
Consolidated Statement of Comprehensive Income
Year Ended March 31, 2021

Millions of Yen
2021
2020
NET INCOME
OTHER COMPREHENSIVE INCOME (LOSS) (Note 18):
Unrealized loss on available-for-sale securities
Foreign currency translation adjustments
Defined retirement benefit plans
Share of other comprehensive gain (loss) in associatedcompanies
Total other comprehensive loss
COMPREHENSIVE INCOME
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO:
Owners of the parent
Noncontrolling interests
See notes to consolidated financial statements.

-6-

Thousands of
U.S. Dollars(Note 1)2021

¥ 1,500¥ 2,627$ 13,548(516 )(255 )
65(363 )(485 )(85 )(4,661 )(2,302 )587

0(706 )(0 )(933 )

0(6,376 )¥ 794¥ 1,694$ 7,172¥358
436¥1,351343$3,234
3,938

HARIMA CHEMICALS GROUP, INC.
and Subsidiaries
Consolidated Statement of Changes in Equity
Year Ended March 31, 2021
Thousands

BALANCE, APRIL 1, 2019
Net income attributable to owners of the parent
Cash dividends, ¥38.00 per share
Purchase of treasury stock
Change in ownership interest in subsidiaries
Net change in the year
BALANCE, MARCH 31, 2020
Net income attributable to owners of the parent
Cash dividends, ¥38.00 per share
Purchase of treasury stock
Disposal of treasury stock
OthersNet change in the year
BALANCE, MARCH 31, 2021

BALANCE, MARCH 31, 2020

Number of
Shares ofCommon Stock
Outstanding

CommonStockCapitalSurplusRetained
Earnings

Treasury
Stock25,652¥ 10,013¥ 9,768¥ 16,950¥ (422 )¥ 1,234¥ (2,020 )Total

Noncontrolling
Interests

Total Equity¥ (166 )¥ 35,357¥ 2,454¥ 37,811

156

2,218
(967 )(606 )(0 )(710 )

2,610

37,7462,218(967 )(546 )(362 )(420 )

(84 )

2,218
(967 )(606 )(0 )(866 )

872(2,440 )(250 )

35,136266

1,091(955 )(0 )27
0(467 )(606 )(0 )25,106

10,013

9,768

18,201(1,028 )1,091(955 )(0 )28(516 )(280 )

63

1,091(955 )(0 )27
0(733 )¥ 356¥ (2,720 )¥ (187 )¥ 34,566¥ 2,876¥ 37,442

Total

Noncontrolling
Interests

Total Equity$ (2,258 )$ 317,369$ 23,575$ 340,944

2,403

9,855
(8,626 )(0 )243
0(4,217 )$ 25,978$ 338,199

(0 )
30

(3 )
0

25,134¥ 10,013¥ 9,765¥ 18,337¥ (998 )CommonStockCapitalSurplusRetained
Earnings

TreasuryStock$ 90,444$ 88,231$ 164,402$ (9,286 )Net income attributable to owners of the parent
Cash dividends, $0.34 per share
Purchase of treasury stock
Disposal of treasury stock
OthersNet change in the year
BALANCE, MARCH 31, 2021

Millions of Yen
Accumulated Other Comprehensive Income
Unrealized
Foreign
Gain onCurrency
DefinedAvailable-for-Sale
Translation
Retirement
Adjustments
Benefit Plans
Securities

Thousands of U.S. Dollars (Note 1)
Accumulated Other Comprehensive Income
Unrealized
Foreign
Gain onCurrency
DefinedAvailable-for-Sale
Translation
Retirement
Adjustments
Benefit Plans
Securities$ 7,876$ (22,040 )

9,855(8,626 )(4,660 )(2,529 )

569

9,855
(8,626 )(0 )243
0(6,620 )$ 3,216$ (24,569 )$ (1,689 )$ 312,221

(0 )
271

(28 )
0
$ 90,444$ 88,203$ 165,631$ (9,015 )See notes to consolidated financial statements.

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HARIMA CHEMICALS GROUP, INC.
and Subsidiaries
Consolidated Statement of Cash Flows
Year Ended March 31, 2021

Millions of Yen
2021
2020
OPERATING ACTIVITIES:
Income before income taxes
Adjustments for:
Income taxes – paid
Depreciation and amortization
Loss on impairment of long-lived assets
Foreign exchange loss
Gain on sales of property, plant and equipment
Gain on sales of investment securities
Changes in assets and liabilities:(Increase) decrease in trade notes and accounts
receivable
Decrease (increase) in inventories
Decrease in trade notes and accounts payable
Other – net
Total adjustments
Net cash provided by operating activities

Thousands of
U.S. Dollars(Note 1)2021

¥ 2,317¥ 3,514$ 20,928(783 )
2,353
342
372
(12 )
(1,567 )(1,024 )
2,258
76
101
(9 )
(6 )

(7,073 )21,254
3,089
3,360(108 )(14,154 )(100 )
554(596 )
128
691
3,008

3,767
(1,492 )(89 )(909 )
2,673
6,187(903 )
5,004(5,383 )
1,156
6,242
27,170INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchases of intangible assets
Purchases of investment securities
Proceeds from sales of investment securities
Other – net
Net cash used in investing activities(2,226 )260(69 )(1,788 )2,649(684 )(1,858 )(3,484 )36(177 )(4 )37
129(3,463 )(20,107 )2,348(623 )(16,150 )23,927(6,178 )(16,783 )FINANCING ACTIVITIES:
Decrease in short-term bank loans – net
Proceeds from long-term debt
Repayments of long-term debt
Dividends paid
Other – net
Net cash used in financing activities(3,980 )5,005(1,453 )(955 )(182 )(1,565 )(754 )
2,198(1,594 )(967 )(928 )(2,045 )(35,950 )45,208(13,124 )(8,626 )(1,644 )(14,136 )FOREIGN CURRENCY TRANSLATION ADJUSTMENTS ON
CASH AND CASH EQUIVALENTS

(75 )

(57 )

(677 )NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS(490 )

622(4,426 )CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR

3,912

3,289

35,336¥ 3,422¥ 3,911$ 30,910

CASH AND CASH EQUIVALENTS, END OF YEAR

See notes to consolidated financial statements.

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HARIMA CHEMICALS GROUP, INC.
and Subsidiaries
Notes to Consolidated Financial Statements
Year Ended March 31, 2021
1.

BASIS OF PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with theprovisions set forth in the Japanese Financial Instruments and Exchange Act and its related
accounting regulations, and in conformity with accounting principles generally accepted in Japan("Japanese GAAP"), which are different in certain respects as to the application and disclosure
requirements of International Financial Reporting Standards.
In preparing these consolidated financial statements, certain reclassifications and rearrangements
have been made to the consolidated financial statements issued domestically in order to present
them in a form which is more familiar to readers outside Japan. In addition, certain reclassifications
have been made in the 2020 consolidated financial statements to conform to the classifications usedin 2021.
The consolidated financial statements are stated in Japanese yen, the currency of the country inwhich HARIMA CHEMICALS GROUP, INC. (the "Company") is incorporated and operates. The
translations of Japanese yen amounts into U.S. dollar amounts are included solely for theconvenience of readers outside Japan and have been made at the rate of ¥110.71 to $1, theapproximate rate of exchange at March 31, 2021. Such translations should not be construed as
representations that the Japanese yen amounts could be converted into U.S. dollars at that or any
other rate.

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa.

Consolidation – The consolidated financial statements include the accounts of the Company
and all its subsidiaries (together, the "Group").
Under the control and influence concepts, those companies in which the Company, directly or
indirectly, is able to exercise control over operations are fully consolidated, and thosecompanies over which the Group has the ability to exercise significant influence are accounted
for by the equity method.
The excess of the cost of acquisition over the fair value of the net assets of an acquired
subsidiary at the date of acquisition is amortized over a period not exceeding 20 years.
All significant intercompany balances and transactions have been eliminated in consolidation.
All material unrealized profit included in assets resulting from transactions within the Group isalso eliminated.

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b.

Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated
Financial Statements – Under Accounting Standards Board of Japan ("ASBJ") Practical Issues
Task Force ("PITF") No. 18, "Practical Solution on Unification of Accounting Policies Applied toForeign Subsidiaries for the Consolidated Financial Statements," the accounting policies andprocedures applied to a parent company and its subsidiaries for similar transactions and events
under similar circumstances should be unified for the preparation of the consolidated financial
statements. However, financial statements prepared by foreign subsidiaries in accordance witheither International Financial Reporting Standards or generally accepted accounting principles
in the United States of America (Financial Accounting Standards Board Accounting Standards
Codification) tentatively may be used for the consolidation process, except for the following
items that should be adjusted in the consolidation process so that net income is accounted for inaccordance with Japanese GAAP, unless they are not material: (a) amortization of goodwill;(b) scheduled amortization of actuarial gain or loss of pensions that has been recorded in equity
through other comprehensive income; (c) expensing capitalized development costs of R&D;(d) cancellation of the fair value model of accounting for property, plant and equipment andinvestment properties and incorporation of the cost model of accounting; and (e) recording again or loss through profit or loss on the sale of an investment in an equity instrument for thedifference between the acquisition cost and selling price, and recording impairment loss throughprofit or loss for other-than-temporary declines in the fair value of an investment in an equity
instrument, where a foreign subsidiary elects to present in other comprehensive income
subsequent changes in the fair value of an investment in an equity instrument.

c.

Unification of Accounting Policies Applied to Foreign Associated Companies for the
Equity Method – ASBJ Statement No. 16, "Accounting Standard for Equity Method of
Accounting for Investments," requires adjustments to be made to conform the associate's
accounting policies for similar transactions and events under similar circumstances to those of
the parent company when the associate's financial statements are used in applying the equity
method, unless it is impracticable to determine such adjustments. In addition, financial
statements prepared by foreign associated companies in accordance with either International
Financial Reporting Standards or generally accepted accounting principles in the United Statesof America tentatively may be used in applying the equity method if the following items areadjusted so that net income is accounted for in accordance with Japanese GAAP, unless they
are not material: (a) amortization of goodwill; (b) scheduled amortization of actuarial gain or lossof pensions that has been recorded in equity through other comprehensive income;(c) expensing capitalized development costs of R&D; (d) cancellation of the fair value model ofaccounting for property, plant and equipment and investment properties and incorporation of thecost model of accounting; and (e) recording a gain or loss through profit or loss on the sale ofan investment in an equity instrument for the difference between the acquisition cost and selling
price, and recording impairment loss through profit or loss for other-than-temporary declines in
the fair value of an investment in an equity instrument, where a foreign associate elects topresent in other comprehensive income subsequent changes in the fair value of an investment
in an equity instrument.

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d.

Business Combinations – Business combinations are accounted for using the purchasemethod. Acquisition-related costs, such as advisory fees or professional fees, are accounted foras expenses in the periods in which the costs are incurred. If the initial accounting for abusiness combination is incomplete by the end of the reporting period in which the businesscombination occurs, an acquirer shall report in its financial statements provisional amounts forthe items for which the accounting is incomplete. During the measurement period, which shallnot exceed one year from the acquisition, the acquirer shall retrospectively adjust theprovisional amounts recognized at the acquisition date to reflect new information obtained about
facts and circumstances that existed as of the acquisition date and that would have affected themeasurement of the amounts recognized as of that date. Such adjustments shall be recognized
as if the accounting for the business combination had been completed at the acquisition date.
The acquirer recognizes any bargain purchase gain in profit or loss immediately on theacquisition date after reassessing and confirming that all of the assets acquired and all of theliabilities assumed have been identified after a review of the procedures used in the purchaseprice allocation. A parent's ownership interest in a subsidiary might change if the parent
purchases or sells ownership interests in its subsidiary. The carrying amount of noncontrollinginterest is adjusted to reflect the change in the parent's ownership interest in its subsidiary while
the parent retains its controlling interest in its subsidiary. Any difference between the fair valueof the consideration received or paid and the amount by which the noncontrolling interest is
adjusted is accounted for as capital surplus as long as the parent retains control over its
subsidiary.

e.

Cash Equivalents – Cash equivalents are short-term investments that are readily convertible
into cash and exposed to insignificant risk of changes in value. Cash equivalents include time
deposits and certificates of deposit, all of which mature or become due within three months ofthe date of acquisition.

f.

Inventories – Inventories are principally stated at the lower of cost, determined by the movingaverage cost method, or net selling value.
The inventories of certain consolidated foreign subsidiaries are stated at the lower of cost,
determined by the first-in, first-out method, or net selling value.

g.

Investment Securities – Investment securities are classified and accounted for as follows:
Marketable available-for-sale securities are reported at fair value, with unrealized gains andlosses, net of applicable taxes, reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated at cost determined by the movingaverage method. For other-than-temporary declines in fair value, investment securities are
reduced to net realizable value by a charge to income.

h.

Property, Plant and Equipment – Property, plant and equipment are stated at cost.
Depreciation of property, plant and equipment of the Company and its consolidated domestic
subsidiaries is principally computed by the declining-balance method, while the straight-line
method is applied to buildings acquired after April 1, 1998, and building improvements andstructures acquired on or after April 1, 2016. Certain domestic subsidiaries and foreignsubsidiaries apply the straight-line method, using rates based on the estimated useful lives of
the assets. The range of useful lives is from 5 to 50 years for buildings and from 4 to 17 years
for machinery and equipment.

i.

Long-Lived Assets – The Group reviews its long-lived assets for impairment whenever eventsor changes in circumstance indicate the carrying amount of an asset or asset group may not berecoverable. An impairment loss is recognized if the carrying amount of an asset or asset groupexceeds the sum of the undiscounted future cash flows expected to result from the continued
use and eventual disposition of the asset or asset group. The impairment loss would bemeasured as the amount by which the carrying amount of the asset exceeds its recoverable
amount, which is the higher of the discounted cash flows from the continued use and eventual
disposition of the asset, or the net selling value at disposition.

j.

Software – Amortization of capitalized software costs is computed using the straight-line
method over five years, the estimated useful life of the assets.
- 11 -

k.

Retirement and Pension Plans – The Company and certain domestic subsidiaries havefunded defined benefit pension plans, defined contribution pension plans, and severance lumpsum payment plans covering substantially all of their employees. Certain foreign subsidiaries
have adopted funded defined benefit plans and defined contribution pension plans.
The Company accounts for the liability for retirement benefits based on the projected benefit
obligations and plan assets at the balance sheet date. The projected benefit obligations are
attributed to periods on a benefit formula basis. Actuarial gains and losses and past service
costs that are yet to be recognized in profit or loss are recognized within equity (accumulated
other comprehensive income), after adjusting for tax effects and are recognized in profit or loss
over 14 years, no longer than the expected average remaining service period of the employees.
Prior service costs are recognized in the period in which they are incurred.
Retirement allowances for directors are recorded as a liability at the amount that would be
required if all directors retired at each balance sheet date. Effective June 24, 2020, theCompany terminated its unfunded retirement allowance plan for all directors. The outstandingbalance of retirement allowances for directors as of March 31, 2020, was reclassified to theother long-term liabilities in the year ended March 31, 2021.

l.

Asset Retirement Obligations – An asset retirement obligation is recorded for a legal
obligation imposed either by law or contract that results from the acquisition, construction,
development, and the normal operation of a tangible fixed asset and is associated with theretirement of such tangible fixed asset. The asset retirement obligation is recognized as the sumof the discounted cash flows required for the future asset retirement and is recorded in the
period in which the obligation is incurred if a reasonable estimate can be made. If a reasonableestimate of the asset retirement obligation cannot be made in the period the asset retirement
obligation is incurred, the liability should be recognized when a reasonable estimate of the asset
retirement obligation can be made. Upon initial recognition of a liability for an asset retirement
obligation, an asset retirement cost is capitalized by increasing the carrying amount of therelated fixed asset by the amount of the liability. The asset retirement cost is subsequently
allocated to expense through depreciation over the remaining useful life of the asset. Over time,
the liability is accreted to its present value each period. Any subsequent revisions to the timingor the amount of the original estimate of undiscounted cash flows are reflected as an
adjustment to the carrying amount of the liability and the capitalized amount of the related asset
retirement cost.

m. Research and Development Costs – Research and development costs are charged to income
as incurred.
n.

Leases – Finance lease transactions are capitalized by recognizing leased assets and leased
obligations in the balance sheet.
All other leases are accounted for as operating leases.

o.

Bonuses to Directors – Bonuses to directors are accrued at the end of the year to which suchbonuses are attributable.

p.

Income Taxes – The provision for income taxes is computed based on the pretax income
included in the consolidated statement of operations. The asset and liability approach is used torecognize deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of assets and liabilities.
Deferred taxes are measured by applying currently enacted income tax rates to the temporary
differences. The Group files a tax return under the consolidated corporate-tax system, whichallows companies to base tax payments on the combined profits or losses of the parent
company and its wholly owned domestic subsidiaries.

q.

Foreign Currency Transactions – All short-term and long-term monetary receivables andpayables denominated in foreign currencies are translated into Japanese yen at the exchange
rates at the balance sheet date. The foreign exchange gains and losses from translation arerecognized in the consolidated statement of operations to the extent that they are not hedged byforward exchange contracts.
- 12 -

r.

Foreign Currency Financial Statements – The balance sheet accounts of the consolidated
foreign subsidiaries are translated into Japanese yen at the current exchange rate as of thebalance sheet date except for equity, which is translated at the historical rate. Differences
arising from such translation are shown as "Foreign currency translation adjustments" underaccumulated other comprehensive income in a separate component of equity. Revenue andexpense accounts of consolidated foreign subsidiaries are translated into yen at the averageexchange rate.

s.

Derivative and Hedging Activities – The Group uses derivative financial instruments tomanage its exposures to fluctuations in interest rates. Interest rate swaps are utilized by theGroup to reduce interest rate risks. The Group does not enter into derivatives for trading or
speculative purposes.
Derivative financial instruments are classified and accounted for as follows: (1) all derivatives
are recognized as either assets or liabilities and measured at fair value, and gains or losses onderivative transactions are recognized in the consolidated statement of operations; and (2) for
derivatives used for hedging purposes, if such derivatives qualify for hedge accounting becauseof high correlation and effectiveness between the hedging instruments and the hedged items,
gains or losses on derivatives are deferred until maturity of the hedged transactions.
Interest rate swaps which qualify for hedge accounting and meet specific matching criteria are
not remeasured at market value, but the differential paid or received under the swap
agreements is recognized and included in interest expense.

t.

Per Share Information – Basic net income per share is computed by dividing net income
attributable to common shareholders by the weighted-average number of common shares
outstanding for the period.
Cash dividends per share presented in the accompanying consolidated statement of operations
are dividends applicable to the respective fiscal years, including dividends to be paid after theend of the year.

u.

Accounting Changes and Error Corrections – Under ASBJ Statement No. 24, "AccountingStandard for Accounting Changes and Error Corrections," and ASBJ Guidance No. 24,"Guidance on Accounting Standard for Accounting Changes and Error Corrections," accounting
treatments are required as follows: (1) Changes in Accounting Policies—When a new
accounting policy is applied following revision of an accounting standard, the new policy isapplied retrospectively unless the revised accounting standard includes specific transitional
provisions, in which case the entity shall comply with the specific transitional provisions.
(2) Changes in Presentation—When the presentation of financial statements is changed, priorperiod financial statements are reclassified in accordance with the new presentation.
(3) Changes in Accounting Estimates—A change in an accounting estimate is accounted for in
the period of the change if the change affects that period only, and is accounted forprospectively if the change affects both the period of the change and future periods.
(4) Corrections of Prior-Period Errors—When an error in prior-period financial statements is
discovered, those statements are restated.

- 13 -

v.

New Accounting Pronouncements- Accounting Standard for Revenue Recognition (ASBJ Statement No. 29 revised on March 31,
2020)- Implementation Guidance on Accounting Standard for Revenue Recognition (ASBJ Guidance
No. 30 revised on March 26, 2021)(a) Overview
This is a comprehensive accounting standard for revenue recognition. Specifically, theaccounting standard establishes the following five-step model that will apply to revenue
from customers:
Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation(b) Scheduled date of adoption
The Company expects to apply the accounting standard and guidance for annual periods
beginning on or after April 1, 2021.
(c) Impact of the adoption of accounting standard and implementation guidance
The adoption of these accounting standard and implementation guidance have no impact
on the retained earnings at the beginning of the next fiscal year.
- Accounting Standard for Fair Value Measurement (ASBJ Statement No. 30 on July 4, 2019)- Implementation Guidance on Accounting Standard for Fair Value Measurement (ASBJ
Guidance No. 31 on July 4, 2019)- Accounting Standard for Measurement of Inventories (ASBJ Statement No. 9 revised on July4, 2019)- Accounting Standard for Financial Instruments (ASBJ Statement No. 10 revised on July 4,
2019)- Guidance on Disclosures about Fair Value of Financial Instruments (ASBJ Guidance No. 19
revised on March 31, 2020)(a) Overview
In order to enhance comparability of financial statements among domestic and overseas
companies, ASBJ developed an "Accounting Standard for Fair Value Measurement" andissued a new standard together with its implementation guidance. The sections revised by
the new accounting standards and implementation guidance are as follows:・

Financial instruments defined by "Accounting Standard for Financial Instruments"

・Measurement methods of inventories held for trading purposes defined by "AccountingStandard for Measurement of Inventories"(b) Scheduled date of adoption
The Company expects to apply the accounting standard and guidance for annual periods
beginning on or after April 1, 2021.
- 14 -

(c) Impact of the adoption of accounting standard and implementation guidance
The Company is in the process of measuring the effects of applying the accounting
standard and guidance in future applicable periods.
3.

SIGNIFICANT ACCOUNTING ESTIMATE
Valuation of deferred tax assets(1) Carrying amounts

Deferred tax assets

Millions of
Yen
2021

Thousands of
U.S. Dollars
2021¥1,243$11,228(2) Information on the significant accounting estimate
Net deferred tax assets were ¥1,243 million ($11,228 thousand) as of March 31, 2021, of which¥965 million ($8,716 thousand) was recorded relating to tax loss carryforwards at LAWTER
BVBA. Under the accounting principles generally accepted in the United States of America,
which LAWTER BVBA applies, a valuation allowance is generally provided to offset deferred tax
assets if, based upon the available evidence, it is more likely than not that some or all of thedeferred tax assets will not be realized. Future estimated taxable income is used to determine
the recoverability of the deferred tax assets. But due to the deterioration of the businessenvironment and the impact of the COVID-19, it could be necessary to revise the assumptions
used in the estimation. In this case, related valuation allowances may be recorded to offset thedeferred tax assets in the next consolidated fiscal year.
4.

INVESTMENT SECURITIESInvestment securities as of March 31, 2021 and 2020, consisted of the following:Thousands of
U.S. Dollars
2021

Millions of Yen
2021
2020
Non-current:
Equity securities
Trust fund investments and other¥ 3,351¥ 3,363$ 30,268

Total¥ 3,351¥ 3,363$ 30,268

The costs and aggregate fair values of investment securities as of March 31, 2021 and 2020, wereas follows:
Millions of Yen
Unrealized
Unrealized
Gains
LossesFair
Value

March 31, 2021

Cost

Securities classified as:
Marketable available-for-sale:
Equity securities¥2,802¥600¥(73 )¥3,329¥2,095¥1,405¥(159 )

¥3,341March 31, 2020
Securities classified as:
Marketable available-for-sale:
Equity securities- 15 -

March 31, 2021
Securities classified as:
Marketable available-for-sale:
Equity securities

Cost$25,309

Thousands of U.S. Dollars
Unrealized
Unrealized
Gains
Losses$5,420Fair
Value$(660)$30,069

Carrying amounts of available-for-sale securities whose fair value is not readily determinable as ofMarch 31, 2021 and 2020, were as follows:
Millions of Yen
2021
2020
Nonmarketable available-for-sale:
Equity securities¥22

Thousands of
U.S. Dollars
2021

¥22

$199

The information for available-for-sale securities which were sold during the years ended March 31,
2021 and 2020, were as follows:
Millions of Yen
Realized
Realized
Proceeds
Gains
LossesMarch 31, 2021
Available-for-sale:
Equity securities
Debt securities¥ 2,657¥ 1,576¥1

Total¥ 2,657¥ 1,576¥1

Available-for-sale:
Equity securities
Debt securities

¥ 5
32

¥4
2

¥

Total

¥ 37

¥6

¥

March 31, 2020

Thousands of U.S. Dollars
Realized
Realized
Proceeds
Gains
LossesMarch 31, 2021
Available-for-sale:
Equity securities
Debt securities$ 24,000$ 14,235

$9

Total

$ 24,000$ 14,235$9- 16 -

5.

INVENTORIESInventories as of March 31, 2021 and 2020, consisted of the following:
Millions of Yen
2020
2021

6.

Thousands of
U.S. Dollars
2021

Finished products
Work in process
Raw materials and supplies¥ 5,084378
6,585¥ 5,666
163
7,109$ 45,922
3,414
59,480Total¥ 12,047¥ 12,938$ 108,816

LONG-LIVED ASSETSThe Group recorded impairment losses of ¥342 million ($3,089 thousand) and ¥76 million for theyears ended March 31, 2021 and 2020, respectively. The Group recognized a decline in value of agolf course and hotel facilities for the year ended March 31, 2020. Also, the Group recognized adecline in value of a golf course, hotel facilities, and paper chemicals facilities of the Hokkaido Plant
for the year ended March 31, 2021. The impairment loss was recognized since the recoverable
value of the assets was lower than the carrying amounts of the assets. The recoverable value of theassets was measured at the fair value considering a third-party appraisal report for the facility.

7.

INVESTMENT PROPERTYThe Group owns certain rental properties, such as office buildings and land. The net of rental
income and operating expenses for those rental properties for the years ended March 31, 2021 and2020, were ¥91 million ($822 thousand) and ¥117 million, respectively.
In addition, the carrying amounts, changes in such balances, and market prices of such properties
were as follows:

April 1,2020
¥2,009April 1,2019
¥2,100April 1,
2020
$18,147

Millions of Yen
Carrying Amount
Increase/
March 31,
Decrease
2021¥(120)¥1,889Millions of Yen
Carrying Amount
Increase/
March 31,
Decrease
2020
¥(91)

¥2,009Thousands of U.S. Dollars
Carrying Amount
Increase/
March 31,
Decrease
2021$(1,084)$17,063

Fair Value
March 31,2021
¥2,796
Fair Value
March 31,2020
¥2,915
Fair Value
March 31,2021
$25,255

Notes:1)

Carrying amount recognized in the consolidated balance sheets is net of accumulated
depreciation and accumulated impairment losses, if any.

- 17 -

8.

2)

Increase during the fiscal year ended March 31, 2021, primarily represents the capital
expenditure for current investment properties of ¥155 million ($1,400 thousand), and thedecrease primarily represents depreciation of ¥45 million ($406 thousand) and impairment
loss of ¥230 million ($2,077 thousand). Increase during the fiscal year ended March 31,
2020, primarily represents the capital expenditure for current investment properties of ¥26
million, and the decrease primarily represents depreciation of ¥26 million, impairment lossof ¥76 million, and sale of ¥15 million.

3)

Fair value of properties is measured by the Group in accordance with the Real-EstateAppraisal Standard.

SHORT-TERM BANK LOANS AND LONG-TERM DEBT
Short-term bank loans as of March 31, 2021 and 2020, consisted of an outstanding balance of lineof credit, notes to banks and bank overdrafts. The average interest rates applicable to the short-termbank loans as of March 31, 2021 and 2020, were 0.7% and 0.8%, respectively. As of March 31,
2021 and 2020, the total committed line of credit was ¥6,000 million ($54,196 thousand) and ¥4,000
million, and unused balance was ¥5,000 million ($45,163 thousand) and ¥3,200 million, respectively.
Long-term debt as of March 31, 2021 and 2020, consisted of the following:Thousands of
U.S. Dollars
2021

Millions of Yen
2021
2020
Unsecured loans from banks and other financial
institutions, due serially to 2024 with interest
rates ranging from 0.5% to 3.7% (2021) andfrom 0.5% to 3.7% (2020)
Obligations under finance leases
Total
Less current portion¥ 8,162890
9,052(506 )¥ 4,578
943
5,521(1,400 )$ 73,724
8,039
81,763(4,570 )Long-term debt, less current portion¥ 8,546¥ 4,121$ 77,193

Annual maturities of long-term debt as of March 31, 2021, for the next five years and thereafter wereas follows:Year Ending March 31

Millions ofYen

Thousands of
U.S. Dollars

2022
2023
2024
2025
2026
2027 and thereafter

¥ 506
377
6,486
1,200
1
482

$ 4,570
3,405
58,585
10,839
9
4,355

Total

¥ 9,052$ 81,763

Certain bank loans and the commitment lines of credit are subject to financial covenants, which use
total equity and continuous operating income without extraordinary items for the most recent year as
credit risk indicators, and require the Group to maintain the financial measures above a certain level.
Based on the financial results for the years ended March 31, 2021 and 2020, the covenants were
not breached since the Group met the requirements.

- 18 -

9.

RETIREMENT AND PENSION PLANS
The Company and some domestic subsidiaries have a defined contribution plan and a defined
benefit plan, including a defined corporate pension plan and retirement lump sum plan. Someforeign subsidiaries have defined contribution plans and defined benefit plans. Some domestic
subsidiaries apply the simplified method to calculate liabilities for retirement benefits and retirement
benefit costs.
In addition, the Company and certain domestic subsidiaries participate in multi-employer pension
plans. Since the pension assets attributable to the Company and certain domestic subsidiaries
cannot be reliably determined based on their contributions, the plan is accounted for as a defined
contribution plan.
Also, a certain domestic subsidiary has a severance payment plan for directors. The retirement
benefits for directors are paid subject to the approval of the shareholders in accordance with theCompanies Act of Japan (the "Companies Act"). The liability for retirement benefits for directors asof March 31, 2021 and 2020 was ¥4 million ($36 thousand) and ¥487 million, respectively, andincluded in liability for retirement benefits in the consolidated balance sheet.
<1> Defined Benefit Plan
(1) The changes in defined benefit obligation for the years ended March 31, 2021 and 2020,
were as follows:
Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Balance at beginning of year
Service cost
Interest cost
Actuarial losses
Benefits paid
Foreign currency translation differences
Others¥ 3,019180
2250(224 )
267¥ 2,953174
2762(182 )(21 )6$ 27,269
1,626
199
452
(2,023 )235
62

Balance at end of year

¥ 3,080¥ 3,019$ 27,820(2) The changes in plan assets for the years ended March 31, 2021 and 2020, were as follows:
Millions of Yen
2020
2021

Thousands of
U.S. Dollars
2021

Balance at beginning of year
Expected return on plan assets
Actuarial gains (losses)
Contributions from the employer
Benefits paid
Foreign currency translation differences
Others¥ 2,16846
113
660(224 )
225¥ 2,146
62
(73 )
228
(182 )(19 )6$ 19,583
415
1,021
5,962
(2,023 )199
44

Balance at end of year

¥ 2,790¥ 2,168$ 25,201- 19 -

(3) The changes in defined benefit obligation under the simplified method for the years ended
March 31, 2021 and 2020, were as follows:
Millions of Yen
2020
2021

Thousands of
U.S. Dollars
2021

Balance at beginning of year
Periodic benefit costs
Benefits paid
Foreign currency translation differences

¥ 146
(9 )
(31 )
(3 )

¥ 147
2
(1 )
(2 )

$ 1,319(81 )(280 )(27 )Balance at end of year

¥ 103

¥ 146

$ 931

(4) Reconciliation between the liability recorded in the consolidated balance sheet and thebalances of defined benefit obligation and plan assets as of March 31, 2021 and 2020, was
as follows:
Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Funded defined benefit obligation
Plan assets
Total
Unfunded defined benefit obligation¥ 3,080(2,790 )290
103¥ 3,019(2,168 )851
146$ 27,820(25,201 )
2,619
931

Net liability arising from defined benefit
obligation

¥

¥

$

393

997

Millions of Yen
2021
2020

3,550

Thousands of
U.S. Dollars
2021

Liability for retirement benefits

¥ 393

¥ 997

$ 3,550

Net liability arising from defined benefit
obligation

¥ 393

¥ 997

$ 3,550(5) The components of net periodic benefit costs for the years ended March 31, 2021 and2020, were as follows:
Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Service cost
Interest cost
Expected return on plan assets
Recognized actuarial losses
Recognized prior service cost
Periodic benefit cost in simplified method

¥ 180
22
(46 )
37
4
(8 )

¥ 174
27
(62 )
30
4
2

$ 1,626
199(415 )
334
36
(72 )

Net periodic benefit costs

¥ 189

¥ 175

$ 1,708- 20 -

(6) Amounts recognized in other comprehensive income (before income tax effect) in respectof defined retirement benefit plans for the years ended March 31, 2021 and 2020, were as
follows:
Millions of Yen
2020
2021

Thousands of
U.S. Dollars
2021

Prior service cost
Actuarial gains
Others¥4(101 )(4 )¥

4(105 )
2$

36(912 )
(36 )

Total

¥ (101 )¥ (99 )$ (912 )(7) Amounts recognized in accumulated other comprehensive income (before income tax
effect) in respect of defined retirement benefit plans as of March 31, 2021 and 2020, wereas follows:
Millions of Yen
2021
2020

Thousands of
U.S. Dollars
2021

Unrecognized prior service cost
Unrecognized actuarial losses

¥ 42
208

¥ 44
307

$ 379
1,879

Total

¥ 250

¥ 351

$ 2,258(8) Plan assets as of March 31, 2021 and 2020a.

Components of plan assets
Plan assets consisted of the following:

b.

2021

2020

Debt securities in Japan
Equity securities in Japan
Debt securities in other countries
Equity securities in other countries
Cash and time deposits
Insurance asset (general account)
Others

9.0 %
11.3
4.0
11.5
0.5
63.4
0.3

8.3 %
6.1
3.5
6.0
1.0
68.2
6.9

Total

100.0 %

100.0 %

Method of determining the expected rate of return on plan assets
The expected rate of return on plan assets is determined considering the long-term
rates of return which are expected currently and in the future from the various
components of the plan assets.

(9) Assumptions used for the years ended March 31, 2021 and 2020, were set forth as follows:

Discount rate
Expected rate of return on plan assets- 21 -

2021

2020

Mainly 0.7%
Mainly 2.0%

Mainly 0.7%
Mainly 3.0%

<2> Defined Contribution Plan
The amount of contributions required for the defined contribution plan of the Group for the years
ended March 31, 2021 and 2020, was ¥210 million ($1,897 thousand) and ¥225 million,
respectively.
<3> Multi-Employer Pension Plan
The contributions to the multi-employer plan, which are accounted for using the same method
as a defined contribution plan, were ¥86 million ($777 thousand) and ¥85 million for the years
ended March 31, 2021 and 2020, respectively.
(1) The funded status of the multi-employer plan as of March 31, 2020 and 2019, was asfollows:
Millions of Yen
2020
2019

Thousands of
U.S. Dollars
2020

Plan assets
Actuarial liabilities of pension plan

¥ 35,561
67,611¥ 38,528
68,843$ 321,209
610,704

Net balance¥ (32,050 )¥ (30,315 )$ (289,495 )(2) The contribution ratio of the Group in the multi-employer plan for the years ended March
31, 2020 and 2019, were 2.1% and 2.1%, respectively.
(3) Supplementary explanation
The above information is obtained from the latest available information.
The net balance in (1) above is mainly caused by past service cost of ¥32,708 million($295,439 thousand) for 2020 and ¥33,225 million for 2019, and a deficiency brought
forward of ¥658 million ($5,943 thousand) for 2020 and ¥2,910 million for 2019. Past
service cost under the plan is amortized on a straight-line basis over 23 years, and thespecial contributions of ¥38 million ($343 thousand) for 2020 and ¥37 million for 2019,
which are utilized for such amortization, were expensed in the consolidated statement ofincome of the Group.
The ratios in (2) above do not represent the actual actuarial liability ratio of the Group.
10.

ASSET RETIREMENT OBLIGATIONS
The changes in asset retirement obligations for the years ended March 31, 2021 and 2020, were as
follows:
Millions of Yen
2021
2020
Balance at beginning of year
Balance at end of year¥49
49

- 22 -¥49
49

Thousands of
U.S. Dollars
2021
$443
443

11.

EQUITYJapanese companies are subject to the Companies Act. The significant provisions in the Companies
Act that affect financial and accounting matters are summarized below:a.

Dividends
Under the Companies Act, companies can pay dividends at any time during the fiscal year in
addition to the year-end dividend upon resolution at the shareholders' meeting. Additionally, forcompanies that meet certain criteria including (1) having a Board of Directors, (2) having
independent auditors, (3) having an Audit & Supervisory Board, and (4) the term of service ofthe directors being prescribed as one year rather than the normal two-year term by its articles ofincorporation, the Board of Directors may declare dividends (except for dividends-in-kind) at any
time during the fiscal year if the company has prescribed so in its articles of incorporation. With
respect to the third condition above, the Board of Directors of companies with (a) board
committees (namely, appointment committee, compensation committee, and audit committee)or (b) an audit and supervisory committee (as implemented under the Companies Act effective
May 1, 2015) may also declare dividends at any time because such companies, by nature, meetthe criteria under the Companies Act. The Company is organized as a company with an audit
and supervisory committee, effective June 25, 2015. The Company meets all the above criteria
and, accordingly, the Board of Directors may declare dividends (except for dividends-in-kind) at
any time during the fiscal year.
The Companies Act permits companies to distribute dividends-in-kind (noncash assets) toshareholders subject to a certain limitation and additional requirements.
Semiannual interim dividends may also be paid once a year upon resolution by the Board of
Directors if the articles of incorporation of the company so stipulate. The Companies Act
provides certain limitations on the amounts available for dividends or the purchase of treasury
stock. The limitation is defined as the amount available for distribution to the shareholders, but
the amount of net assets after dividends must be maintained at no less than ¥3 million.

b.

Increases/Decreases and Transfer of Common Stock, Reserve, and Surplus
The Companies Act requires that an amount equal to 10% of dividends must be appropriated asa legal reserve (a component of retained earnings) or as additional paid-in capital (a componentof capital surplus) depending on the equity account charged upon the payment of such
dividends until the aggregate amount of legal reserve and additional paid-in capital equals 25%of the common stock. Under the Companies Act, the total amount of additional paid-in capitaland legal reserve may be reversed without limitation. The Companies Act also provides that
common stock, legal reserve, additional paid-in capital, other capital surplus, and retained
earnings can be transferred among the accounts within equity under certain conditions upon
resolution of the shareholders.

c.

Treasury Stock and Treasury Stock Acquisition Rights
The Companies Act also provides for companies to purchase treasury stock and dispose ofsuch treasury stock by resolution of the Board of Directors. The amount of treasury stock
purchased cannot exceed the amount available for distribution to the shareholders, which isdetermined by a specific formula. Under the Companies Act, stock acquisition rights are now
presented as a separate component of equity. The Companies Act also provides thatcompanies can purchase both treasury stock acquisition rights and treasury stock. Suchtreasury stock acquisition rights are presented as a separate component of equity or deducted
directly from stock acquisition rights.

- 23 -

12.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the years ended March 31, 2021 and 2020,
principally consisted of the following:
Millions of Yen
2020
2021
Employees' salaries and bonuses
Net periodic retirement benefit
Transport
Depreciation
RentalResearch and development

13.

¥3,426
212
3,223
317
254
2,599

¥3,600
215
3,465
298
243
2,635

Thousands of
U.S. Dollars
2021$30,946
1,915
29,1122,863
2,294
23,476

INCOME TAXESThe Company and its domestic subsidiaries are subject to Japanese national and local income taxes
which, in the aggregate, resulted in normal effective statutory tax rates of approximately 30.6% and30.6% for the years ended March 31, 2021 and 2020, respectively. Foreign subsidiaries are subject
to the income taxes of the countries in which they operate.
The tax effects of significant temporary differences and tax loss carryforwards which resulted indeferred tax assets and liabilities at March 31, 2021 and 2020, were as follows:
Millions of Yen
2021
2020
Deferred tax assets:
Tax loss carryforwards
Impairment loss on long-lived assets
Loss on revaluation of investment securities
Retirement benefits to directors
Unrealized gain on property, plant andequipment
OthersTotal of tax loss carryforwards and temporary
differences
Less valuation allowance for tax loss
carryforwards
Less valuation allowance for temporary
differences
Total valuation allowance
Deferred tax assets
Deferred tax liabilities:
Reserve for deferred gains on sales of property,
plant and equipment
Unrealized gain on available-for-sale securities
Undistributed earnings of foreign subsidiaries
Depreciation of foreign subsidiaries
Intangible fixed assets of foreign subsidiaries
OthersDeferred tax liabilities
Net deferred tax assets- 24 -

Thousands of
U.S. Dollars
2021¥ 1,653
1,481
66
1¥ 1,717
1,468
113
149

$ 14,931
13,377
596
9

97
902

97
896

876
8,148

4,200

4,440

37,937(612 )(576 )(5,528 )(1,634 )(2,246 )¥ 1,954(1,692 )(2,268 )¥ 2,172(14,759 )(20,287 )$ 17,650¥(47 )(162 )(327 )(683 )(50 )(252 )¥ (1,521 )

¥

(49 )
(364 )(318 )(466 )(62 )(210 )¥ (1,469 )

$

¥

¥

$

433

703

(425 )(1,463 )(2,954 )(6,169 )(452 )(2,275 )$ (13,738 )3,912

The expiration of tax loss carryforwards, the related valuation allowances, and the resulting net
deferred tax assets as of March 31, 2021 and 2020, were as follows:

March 31, 2021
Deferred tax assets
relating to tax loss
carryforwards
Less valuation
allowances for tax
loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

1 Year or
Less

After
1 Yearthrough
2 Years

¥ 105

¥

After
2 Years
through
3 Years

Millions of Yen
After
After
4 Years
3 Years
throughthrough
5 Years
4 Years

After
5 Years

Total

¥ 19

¥ 1,529¥ 1,653

(88 )

(14 )

(510 )(612 )

17

5

1,019

1,041

¥8

¥ 1,707¥ 1,717(575 )(576 )

1,132

1,141

Thousands of U.S. Dollars
After
After
After
4 Years
3 Years
2 Years
throughthroughthrough
5 Years
4 Years
3 Years

After
5 Years

Total

$

$ 172

$ 13,811$ 14,931(795 )(126 )(4,607 )(5,528 )

153

46

9,204

9,403

¥

¥

March 31, 2020
Deferred tax assets
relating to tax loss
carryforwards
Less valuation
allowances for tax
loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

March 31, 2021
Deferred tax assets
relating to tax loss
carryforwards
Less valuation
allowances for tax
loss carryforwards
Net deferred tax assets
relating to tax loss
carryforwards

¥ 2

¥

¥

¥

(1 )
1

8

1 Year or
Less

After
1 Yearthrough
2 Years

$ 948

$

$

Net deferred tax assets relating to tax loss carryforwards were ¥1,041 million ($9,403 thousand) and¥1,141 million for the years ended March 31, 2021 and 2020, respectively. They were mainly
recorded at LAWTER BVBA as a result of future taxable income consideration.

- 25 -

A reconciliation between the normal effective statutory tax rate and the actual effective tax rate
reflected in the accompanying consolidated statement of operations for the years ended March 31,
2021 and 2020, were as follows:

14.

2021

2020

Normal effective statutory tax rate
Expenses not deductible for income tax purposes
Inhabitant tax on per capita basis
Difference of income tax rates applicable to income in certain
foreign countries
Increase (decrease) in valuation allowance
Tax credit
Undistributed earnings of foreign subsidiaries
Other – net

30.6 %
0.5
1.4

30.6 %
0.1
0.9

0.3
1.7
(2.9 )
0.4
3.3(8.2 )(0.5 )(1.2 )
1.2
2.4

Actual effective tax rate

35.3 %

25.3 %RESEARCH AND DEVELOPMENT COSTS
Research and development costs charged to income were ¥2,599 million ($23,476 thousand) and¥2,635 million for the years ended March 31, 2021 and 2020, respectively.

15.

LEASESThe Group leases certain buildings and structures, machinery and equipment, and other assets.
Total lease expenses for the years ended March 31, 2021 and 2020, were ¥337 million ($3,044
thousand) and ¥315 million, respectively.
The future minimum lease payments commitment under noncancelable operating leases as ofMarch 31, 2021, are as follows:

16.

Millions ofYen

Thousands of
U.S. Dollars

Due within one year
Due after one year

¥ 166
835

$ 1,499
7,542

Total

¥ 1,001$ 9,041

FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES(1) Group Policy for Financial Instruments
The Group uses financial instruments, mainly bank loans based on its capital financing plan.
Short-term bank loans are used to fund the Group's ongoing operations. Derivatives are notused for speculative purposes, but to manage exposure to financial risks as described in (2)below.

- 26 -

(2) Nature and Extent of Risks Arising from Financial Instruments
Receivables, such as trade notes and trade accounts, are exposed to customer credit risk.
Payment terms of payables, such as trade notes and trade accounts, are primarily less than one
year. Payment in foreign currencies is exposed to the market risk of fluctuation in foreign
currency exchange rates. Investment securities are exposed to the risk of market pricefluctuations. Short-term bank loans and long-term debt are related to ongoing operations andworking capital. Although a part of such bank loans are exposed to market risks from changes
in variable interest rates, those risks are mitigated by using interest rate swaps. Long-term
deposits received are mainly related to deposits for membership at a golf course and are
exposed to liquidity risk.
(3) Risk Management for Financial Instruments
Credit risk management
Credit risk is the risk of economic loss arising from a counterparty's failure to repay or service
debt according to the contractual terms. The Group manages its credit risk from receivables
based on internal guidelines, which include monitoring of payment terms and balances of major
customers by each business administration department to identify the default risk of customers
at an early stage.
The counterparties to the Group's derivative contracts are limited to major international financial
institutions to reduce credit risk.
The maximum credit risk exposure of financial assets is limited to their carrying amounts as ofMarch 31, 2021.
Market risk management (foreign exchange risk and interest rate risk)
Interest rate swaps are used to manage exposure to market risks from changes in interest rates
of loans payable.
Investment securities are managed by monitoring market values and the financial position ofissuers on a regular basis.
Derivative transactions entered into by the Group have been made in accordance with internal
policies that regulate the authorization and credit limit amount.
Liquidity risk management
Liquidity risk is the risk that the Group cannot meet its contractual obligations in full on theirmaturity dates. The Group manages its liquidity risk by holding adequate volume of liquid assets
at the level of one month's sales volume, along with adequate financial planning by the
corporate treasury department.

- 27 -

(4) Fair Value of Financial Instruments
Fair values of financial instruments are based on quoted prices in active markets. If a quoted
price is not available, another rational valuation technique is used instead.
(a) Fair value of financial instruments
Carrying amounts, fair values, and the differences between carrying amounts and fairvalues as of March 31, 2021 and 2020, were as follows. The accounts for which fair value
cannot be reasonably determined are not included in the following:
Millions of Yen
Carrying
AmountFair Value

Cash and cash equivalents
Notes and accounts receivable
Investment securities

¥

¥

Total

March 31, 2021

3,422
18,266
3,329

Unrealized
Gain (Loss)

3,422
18,266
3,329¥¥ 25,017¥ 25,017¥

Notes and accounts payable
Short-term bank loans
Long-term debt
Long-term deposits received¥ (9,544 )(8,626 )(9,052 )(556 )¥ (9,544 )(8,626 )(9,059 )(525 )¥ (7 )31

Total¥ (27,778 )¥ (27,754 )¥ 24March 31, 2020

Carrying
AmountFair Value

Cash and cash equivalents
Notes and accounts receivable
Investment securities

¥

¥

Total

Millions of Yen

3,911
18,517
3,341¥¥ 25,769¥ 25,769¥

Notes and accounts payable
Short-term bank loans
Long-term debt
Long-term deposits received¥ (10,360 )(12,384 )(5,521 )(583 )¥ (10,360 )(12,384 )(5,538 )(549 )¥ (17 )
34

Total

¥ (28,848 )¥ (28,831 )¥ 17- 28 -

3,911
18,517
3,341

Unrealized
Gain (Loss)Thousands of U.S. Dollars
Carrying
Unrealized
AmountFair Value
Gain (Loss)

March 31, 2021
Cash and cash equivalents
Notes and accounts receivable
Investment securities

$

Total

30,910164,990
30,069$30,910164,990
30,069$$ 225,969$ 225,969$

Notes and accounts payable
Short-term bank loans
Long-term debt
Long-term deposits received$ (86,207 )(77,915 )(81,763 )(5,022 )$ (86,207 )(77,915 )(81,826 )(4,742 )$ (63 )
280

Total

$ (250,907 )$ (250,690 )$ 217

Cash and Cash Equivalents and Notes and Accounts Receivable
The carrying values of cash and cash equivalents and notes and accounts receivableapproximate fair value because of their short maturities.
Investment Securities
The fair values of marketable and investment securities are measured at the quoted market
price of the stock exchange for the equity instruments, and at the quoted price obtained
from the financial institution for certain debt instruments. The fair value information forinvestment securities by classification is included in Note 4.
Notes and Accounts Payable, Short-Term Bank Loans, and Current Portion of Long-Term
Debt
The carrying values of notes and accounts payable, short-term bank loans, and current
portion of long-term debt approximate fair value because of their short maturities.
Long-Term Debt
The fair values of long-term debt are determined by discounting the future cash flows
related to the debt at the Group's assumed corporate borrowing rate for the fiscal year
ended March 31, 2021.
Long-Term Deposits Received
The fair values of long-term deposits received are determined by discounting the future
cash flows estimable from the past refund experience and by the estimated interest rate
reflecting assumed refund period and credit risk.
Derivatives
The fair value information for derivatives is included in Note 17.
(b) Carrying amount of financial instruments whose fair value cannot be reliably determined
Millions of Yen
2021
2020
Investments in equity instruments that do
not have a quoted market price in an
active market- 29 -¥22¥22

Thousands of
U.S. Dollars
2021

$199

(5) Maturity Analysis for Financial Assets with Contractual Maturities

March 31, 2021

Due inOne Yearor Less

Cash and cash equivalents
Notes and accounts receivable¥ 3,422
18,266¥¥¥¥ 21,688

¥

¥

¥

Total

Millions of Yen
Due after
Due after
Five Years
One YearthroughthroughTen Years
Five Years

Due after
Ten Years

March 31, 2020

Due inOne Yearor Less

Cash and cash equivalents
Notes and accounts receivable¥ 3,91118,517¥¥¥¥ 22,428

¥

¥

¥

Total

Thousands of U.S. Dollars
Due after
Due after
Five Years
One YearthroughthroughTen Years
Five Years

Due after
Ten Years

March 31, 2021

Due inOne Yearor Less

Cash and cash equivalents
Notes and accounts receivable$ 30,910
164,990$$$$ 195,900

$

$

$

Total
17.

Millions of Yen
Due after
Due after
Five Years
One YearthroughthroughTen Years
Five Years

Due after
Ten Years

DERIVATIVESThe Group also enters into interest rate swap contracts to manage its interest rate exposures oncertain liabilities.
All derivative transactions are entered into to hedge interest exposures incorporated within theGroup's business. Accordingly, market risk in these derivatives is generally offset by opposite
movements in the value of the hedged liabilities.
Because the counterparties to these derivatives are limited to major international financial
institutions, the Group does not anticipate any losses arising from credit risk.
Derivative transactions entered into by the Group have been made in accordance with internal
policies which regulate the authorization and credit limit amount.
Derivative Transactions to Which Hedge Accounting Is Not Applied
March 31, 2021
Not applicable
March 31, 2020
Not applicable- 30 -

18.

OTHER COMPREHENSIVE INCOME (LOSS)
The components of other comprehensive income (loss) for the years ended March 31, 2021 and2020, were as follows:
Millions of Yen
2020
2021
Unrealized loss on available-for-sale securities:
Gains (losses) arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect

¥

Total
Foreign currency translation adjustments:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Defined retirement benefit plans:
Adjustments arising during the year
Reclassification adjustments to profit or loss
Amount before income tax effect
Income tax effect
Total
Share of other comprehensive loss in associatedcompanies – Losses arising during the year
Total
Total other comprehensive income (loss)
19.

Thousands of
U.S. Dollars
2021

848
(1,567 )(719 )
203¥ (448 )6(442 )
79$¥ (516 )¥ (363 )$ (4,661 )¥ (255 )¥ (485 )$ (2,302 )(255 )(485 )(2,302 )¥ (255 )¥ (485 )$ (2,302 )

¥

59
42
101
(36 )

¥ (133 )
34
(99 )
14

$

533
379
912
(325 )¥

65¥ (85 )

$

587

¥

0

¥

0

$

0

¥

0

¥

0

$

0

¥ (706 )¥ (933 )7,659(14,154 )(6,495 )
1,834$ (6,376 )NET INCOME PER SHARE
Details of the basic net income per share ("EPS") for the years ended March 31, 2021 and 2020,
were as follows:
Millionsof YenNet Income
Attributable to
Owners of the
ParentThousandsof Shares¥ 1,091

25,125¥ 43.44¥ 2,218

25,294¥ 87.67

WeightedAverage
SharesYen

Dollars

EPS

For the year ended March 31, 2021:
Basic EPS
Net income available to commonshareholders
For the year ended March 31, 2020:
Basic EPS
Net income available to commonshareholders- 31 -$ 0.39Diluted net income per share is not disclosed because there are no outstanding potentially dilutive securities.
20.

RELATED PARTY DISCLOSURES(1) The Transactions between the Company and Related Parties
Transactions between the Company and related parties for the years ended March 31, 2021 and 2020, were as follows:
Fiscal year ended March 31, 2021
Not applicable
Fiscal year ended March 31, 2020
Not applicable(2) Transactions between Subsidiaries and Related Parties
Transactions between subsidiaries and related parties for the years ended March 31, 2021 and 2020, were as follows:
Fiscal year ended March 31, 2021

Type of Related Parties

Name

Owned by certain directors of theCompany and their relatives

Harima Food, Inc.

Note:

Address
Kakogawa-shi,
Hyogo, Japan

Millions of
Yen
CapitalAmount¥30

Millions ofYen
Description ofBusiness

Percentage of Equity
Ownership in the Company

Food
manufacturing-

Nature of Transactions

AmountLease payments

¥ 5

$ 45

Other current assets, end of year
Minimum rental commitments

0
15

0
135

Harima Food, Inc. is a wholly owned subsidiary of Hasegawa Kosan Co., Ltd.
Lease payments are determined based on fair value (used to calculate property taxes).

Fiscal year ended March 31, 2020

Type of Related Parties

Name

Owned by certain directors of theCompany and their relatives

Harima Food, Inc.

Note:

Address
Kakogawa-shi,
Hyogo, Japan

Millions of
Yen
CapitalAmount¥30

Millions ofYen
Description ofBusiness

Percentage of Equity
Ownership in the Company

Food
manufacturing-

Harima Food, Inc. is a wholly owned subsidiary of Hasegawa Kosan Co., Ltd.
Lease payments are determined based on fair value (used to calculate property taxes).

- 32 -

Thousands of
U.S. Dollars

Nature of Transactions

AmountLease payments¥ 5

Other current assets, end of year
Minimum rental commitments

0
21

21.

SUBSEQUENT EVENT
Appropriations of Retained Earnings
The following appropriation of retained earnings at March 31, 2021, was approved at the Company's
Board of Directors' meeting held on May 19, 2021:

Year-end cash dividends, ¥19.00 ($0.17) per share
22.

Millionsof YenThousands of
U.S. Dollars¥478$4,318

SEGMENT INFORMATION
Under ASBJ Statement No. 17, "Accounting Standard for Disclosures about Segments of anEnterprise and Related Information," and ASBJ Guidance No. 20, "Guidance on AccountingStandard for Disclosures about Segments of an Enterprise and Related Information," an entity isrequired to report financial and descriptive information about its reportable segments. Reportablesegments are operating segments or aggregations of operating segments that meet specified
criteria. Operating segments are components of an entity about which separate financial information
is available and for which such information is evaluated regularly by the chief operating decisionmaker in deciding how to allocate resources and in assessing performance. Generally, segment
information is required to be reported on the same basis as is used internally for evaluating
operating segment performance and deciding how to allocate resources to operating segments.
(1) Description of Reportable Segments
The Group's reportable segments are those for which separate financial information is available
and regular evaluation by the Company's management is performed in order to decide how
resources are allocated among the Group.
"Resin & Tall Oil Products" manufactures and sells paint resin, resins for print inks, tall oil
products, and synthetic rubber emulsifiers. "Paper Chemicals" manufactures and sells paperstrengthening agents, sizing agents, and surface-coating agents. "Electronics Materials"
manufactures and sells electronics materials. "Lawter" manufactures and sells resins for print
inks and adhesives.
(2) Methods of Measurement for the Amounts of Sales, Profit, Assets, and Other Items for
Each Reportable Segment
The accounting policies of each reportable segment are consistent with those disclosed in Note2, "Summary of Significant Accounting Policies."- 33 -

(3) Information about Sales, Profit, and Other Items Is As Follows:
Millions of Yen
2021
Reportable Segments

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Other:
Depreciation
Net result of interest income and interest expense
Equity in earnings (losses) of associated companies
Notes:

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials¥ 14,784
228¥ 15,012¥(491 )

¥ 18,4814¥ 18,485¥1,988¥ 5,005

781
(3 )

738
10

158
(0 )

¥ 5,005¥272

Lawter

Total

Other

Total

Reconciliations

Consolidated¥ 23,069
401¥ 23,470¥ 386¥ 61,339
633¥ 61,972¥2,155¥ 1,525156¥ 1,681¥ 27¥ 62,864
789¥ 63,653¥2,182¥ (13 )
(789 )¥ (802 )¥(605 )

¥ 62,851

534(169 )(158 )

2,211(162 )(158 )

142
(6 )

2,353
(168 )(158 )(69 )48¥ 62,851¥1,5772,353(237 )(110 )"Other" comprises business segments not attributable to a reportable segment and is mainly comprised of real estate management.
Reconciliations of segment profit include reconciliation gain of inventories of ¥113 million ($1,021 thousand) and company-wide expenses of ¥732 million ($6,612 thousand), which are not attributable to any reportablesegment. Assets are not allocated to reportable segments as they are not used to determine allocation of management resources or for assessment of performance of the Company.
Millions of Yen
2020
Reportable Segments

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit
Other:
Depreciation
Net result of interest income and interest expense
Equity in earnings (losses) of associated companies
Notes:

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials¥ 18,189
209¥ 18,398¥419¥ 18,92848¥ 18,976¥1,839¥ 5,298

766
(5 )

745
(6 )

164
(1 )

¥ 5,298¥158

Lawter

Total

Other

Total

¥ 27,655
38¥ 27,693¥1,655¥ 70,070
295¥ 70,365¥4,071¥ 1,726
181¥ 1,907¥140¥ 71,796
476¥ 72,272¥4,211451(156 )(51 )

2,126(168 )
(51 )

132
(3 )

2,258
(171 )(51 )Reconciliations¥

Consolidated

3(476 )¥ (473 )¥(458 )

¥ 71,799¥ 71,799¥3,753

(69 )
11

2,258
(240 )(40 )"Other" comprises business segments not attributable to a reportable segment and is mainly comprised of real estate management.
Reconciliations of segment profit include reconciliation gain of inventories of ¥104 million and company-wide expenses of ¥579 million, which are not attributable to any reportable segment. Assets are not allocated toreportable segments as they are not used to determine allocation of management resources or for assessment of performance of the Company.
Thousands of U.S. Dollars
2021
Reportable Segments

Sales:
Sales to external customers
Intersegment sales or transfers
Total
Segment profit (loss)
Other:
Depreciation
Net result of interest income and interest expense
Equity in earnings (losses) of associated companies

Resin &
Tall Oil
Products

Paper
ChemicalsElectronics
Materials$ 133,538
2,060$ 135,598$(4,435 )$ 166,932
36$ 166,968$17,957$ 45,208

7,054
(27 )

6,666
90

1,427
(0 )

$ 45,208$2,457Lawter

Total

Other

Total

Reconciliations

Consolidated$ 208,373
3,622$ 211,995$ 3,487$ 554,051
5,718$ 559,769$19,466$ 13,774
1,410$ 15,184$ 243$ 567,825
7,128$ 574,953$19,709$ (117 )(7,128 )$ (7,245 )$(5,465 )$ 567,708

4,823(1,527 )(1,427 )19,970(1,464 )(1,427 )

1,283
(45 )

21,253(1,518 )(1,427 )(623 )
434- 34 -$ 567,708$14,244
21,253(2,141 )(994 )

[Related information]
1.

Information about geographical areas
Net sales to customers and property, plant and equipment by region for the years ended March
31, 2021 and 2020, were as follows:(1) Net sales
Millions of Yen
2021

Japan

South and North
America
UnitedStates
Other

China

Other

Europe

Other

Total

¥27,728¥8,440¥9,718¥1,598¥10,348¥2,165¥62,851

Asia¥2,854

Millions of Yen
2020

Japan

South and North
America
UnitedStates
Other

China

Other

Europe

Other

Total

¥31,193¥10,083¥9,391¥1,682¥12,560¥2,980¥71,799

Asia¥3,910Thousands of U.S. Dollars
2021

Japan
$250,456

South and North
America
UnitedStates
Other

China

Other

Europe

Other

Total

$76,235$87,779$14,434$93,469$19,556$567,708$25,779

Asia

Notes:
1)

Sales are classified by country or region based on the location of customers.

(2) Net property, plant and equipment
Millions of Yen
2021

Japan

South and North
America
UnitedStates
Other

China

Other

Europe

Other

Total

¥12,525¥3,863¥2,041¥19¥2,305¥1,596¥22,451

¥102

Asia

Millions of Yen
2020

Japan

South and North
America
UnitedStates
Other

China

Other

Europe

Other

Total

¥13,061¥4,272¥2,109¥10¥2,292¥1,247¥23,115¥124- 35 -

Asia

Thousands of U.S. Dollars
2021

Japan
$113,133

South and North
America
UnitedStates
Other

China

Other

Europe

Other

Total

$34,893$18,436$172$20,820$14,416$202,791

$921

Asia

2. Information by principal customers
Information is not provided because there are no customers who account for more than 10% of total consolidated net sales.
[Loss on impairment of long-lived assets by reportable segment]
Loss on impairment of long-lived assets by reportable segment for the years ended March 31, 2021 and 2020, was as follows:
Millions of Yen
2021
Resin & Tall
Oil Products
Loss on impairment¥

Reportable Segments
Paper
Electronics
Chemicals
Materials¥112¥

Lawter

Total

Other

¥

¥112

¥230

Eliminations/
Corporate¥

Consolidated¥342

Millions of Yen
2020
Resin & Tall
Oil Products
Loss on impairment¥

Reportable Segments
Paper
Electronics
Chemicals
Materials¥¥

Lawter

Total

Other

¥

¥

¥76

Eliminations/
Corporate¥

Consolidated¥76

Thousands of U.S. Dollars
2021
Resin & Tall
Oil Products
Loss on impairment$

Reportable Segments
Paper
Electronics
Chemicals
Materials$1,012$******- 36 -

Lawter

Total

Other

$

$1,012$2,077

Eliminations/
Corporate$

Consolidated$3,089- 37 -

- 38 -

- 39 -

- 40 -

Corporate Overview (as of March 31, 2021)
FoundedNovember 18, 1947

Capital Stock

10,012.95 million yen

Head Office

3-8-4 Nihonbashi, Chuo-ku, Tokyo

Osaka Head Office

4-4-7 Imabashi, Chuo-ku, Osaka

Tokyo Head Office

3-8-4 Nihonbashi, Chuo-ku, Tokyo

Laboratories

Central Research Laboratory, Tsukuba Research Laboratory

PlantsKakogawa Plant, Tokyo Plant, Fuji Plant, Ibaraki Plant, Hokkaido Plant, Sendai
Plant, and Shikoku Plant

Sales Offices

Tokyo Sales Office, Osaka Sales Office, Fuji Sales Office, Hokkaido Sales Office,Sendai Sales Office, and Shikoku Sales Office

Number of Employees

84 (Consolidated: 1,427)

Number of Group Companies 34
Business Activities

Manufacture and sale of Resin & Tall Oil Products, Paper Chemicals,Electronics Materials, etc.

Websitewww.harima.co.jp- 41 -

Principal Subsidiaries
Company name

Capital stock

Percentage ofequityparticipation (%)
100

Harima Chemicals, Inc.

5,000,000 thousandyen

Harima Trading, Inc.

48,000 thousand yen

100

Seven Rivers, Inc.

14,000 thousand yen

100

Harima M.I.D., Inc.

300,000 thousand yen

75

Nippon Filler Metals, Ltd.

45,000 thousand yen

100

HARIMA USA, Inc.

3,350 thousand U.S.
dollars

100

Harima do Brasil Industria Quimica
Ltda.

42,588 thousand Brasil
real

99.88

Harimatec Hangzhou Co., Ltd.

8,690 thousand
Chinese yuan

100

Harimatec Malaysia Sdn. Bhd.

1,356 thousand
Malaysian ringgit

100

Hangzhou Hanghua Harima
Chemicals Co., Ltd.

52,296 thousand
Chinese yuan

56.07

Harimatec Czech, s.r.o.

7,000 thousand Czech
koruna100

Xinyi Rihong Plastic Chemical Co.,Ltd.

27,390 thousand
Chinese yuan

100

Lawter B.V.

76,300 thousand euro

97.68

Harima Chemicals (Shanghai) Co.,Ltd

12,652 thousand
Chinese yuan100

- 42 -

Main business
Manufacture andsale of Resin & Tall
Oil Products, Paper
Chemicals,Electronics
Materials, etc.
Real estate
management, etc.
Manufacture andsale of industrial
detergents, etc.
Manufacture andsale of tall oil
products
Manufacture andsale of electronicmaterials
Raw material
procurement,
Business support in
the U.S.
Holding company
of U.S. group
Manufacture andsale of rosin and its
derivatives
Manufacture andsale of electronicmaterials
Manufacture andsale of electronicmaterials
Manufacture andsale of papermaking
chemicals
Manufacture andsale of electronicmaterials
Manufacture andsale of rosin and its
derivatives
Control of Lawter
Group’s operations
Support of Chinese
businessDirectors and Corporate Auditors (as of March 31, 2021)
President
Senior Executive
Managing Director
Executive
Managing Director
Executive Director
Managing Director
Managing Director
Managing Director
Audit＆Supervisory
Committee Member
Audit＆Supervisory
Committee Member *Audit＆Supervisory
Committee Member *Yoshihiro Hasegawa
Teruo Kaneshiro
Ichiro Taninaka
Tsutomu Nishioka
Shunichiro Taoka
Ryohei Kataoka
Eiketsu Ro
Hideo Yamada
Tatsuya Michigami
Tsuneo Takahashi* denotes Outside Corporate Auditors.
Status of Shares (as of March 31, 2021)(1) Total number of shares authorised to be issued
59,500,000(2) Total number of shares outstanding
26,080,396(including 946,459 shares of treasury stocks)(3) Number of shareholders
2,925(4) Major shareholders
Status of shareholding
Number of shares held
Ratio of number of shares held(Thousands of shares)
against total number of shares
outstanding (%)
Hasegawakosan Co., Ltd.
5,826
23.18
Harima Chemicals Mutual
Prosperity Association
Shorai, Ltd.

1,339

5.32

1,278

5.08

Sumitomo Mitsui Banking
Corporation
Shorai Foundation for Scienceand Technology
Japan Master-Trust Trust bank

1,094

4.35

965

3.83

952

3.78

Hyogo Prefectural Credit Federationof Agricultural Cooperatives

728

2.89

The Minato Bank, Ltd

692

2.75

Keihansin Kougyou
Corporation
Bank of Mitsubishi UFJ, Ltd.

672

2.67

476

1.89

(Notes)

1. In “Number of shares held,” figures less than one thousand are rounded down.
2. Ratio of number of shares held against total number of shares outstanding is determined basedon the total number of shares outstanding minus the number of treasury stocks (946,459shares),which amounts to 25,133,937 shares. The numbers shown are rounded down to two decimal places.

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